You have been given the assignment to read Beer School: Bottling Success at The Brooklyn Brewery. Upon completion of reading this informative book dealing with this real life rags to riches entrepreneurial….
Calculate the total costs of the product over its life cycle.
Chocco Toys has developed a toy that it believes will be the hot new toy for the holidays this year. Demand for the toy is expected to be 8,000,000 this year, but will drop to 500,000 next year, and go down to 10,000 the third year, after which Chocco believes that it will not be able to sell the product anymore. Development costs are expected to total $10,000,000, and advertising is expected to cost $2,000,000. Other fixed costs are expected to be $1,000,000. The product will cost $1 in direct materials and $2 in direct labor per unit. Chocco applies variable overhead to products at 200% of direct labor costs. Calculate the total costs of the product over its life cycle.